Leadership and Performance Management: Steel Co. Case Study Solution

This case study examines the performance management challenges faced by Steel Co., a small manufacturing company with an autocratic owner-manager and a divisional director employing a participative approach. The analysis focuses on providing advice to the Divisional Director on issues such as low employee commitment and the need for cultural change through performance management. The solution outlines strategies for structuring individual performance targets to maximize firm performance, leveraging KPIs and team-based targets. It also emphasizes how to use performance management systems to improve employee development and communication, including the integration of performance management with other HR processes and the effectiveness of linking performance to financial rewards to boost employee motivation and overall company success. The study draws upon various academic sources to support its recommendations.

MANAGING PEOPLE
(CASE STUDY 2: PERFORMANCE MANAGEMENT AT STEEL CO.)

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Outlining of the advice that would give to the Divisional Director in respect of the various
issues faced by Steel Co..............................................................................................................1
Structuring individual performance targets so as to maximise the firm’s performance..............1
How a performance management system can be used to improve employee development and
communications...........................................................................................................................2
The need to integrate performance management systems with other human resource processes
.....................................................................................................................................................4
The effectiveness of linking performance to financial reward....................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

LIST OF FIGURES
Figure 1 Stages of performance management system.....................................................................3

INTRODUCTION
Steel Co. is a small manufacturing company which is facing several difficulties in
managing their employees. This organization is totally run by an owner-manager and employees
of around sixty-five (65) people. This company has been established approximately before thirty
years and due to this; majority of their workers are having mixed performance. There are
basically two sections in this firm i.e. sales team and manufacturing operation. In this given
scenario, owner manager always use an autocratic approach and maintain a command on all its
workers. On the other hand, the divisional director uses participative approach and always
understands the need to view employee as assets. One of the major problems faced by divisional
director is related to the working of group of employees. He founded that they lacks into
commitment and highly focused on their earning and pay. For the same, there are number of
initiatives that are undertaken in order to improve both individual’s and firm’s performance.
Divisional director of firm explained to the business advisor that he wants a cultural
change by using performance management as a tool. He just requires enhancing the performance
of company. Further, this study gives significant information for improving the performance of
individuals as it is highly related with the overall sales of company (Thorpe and Beasley, 2004).
Here, business advisors are required to give significant advice on managing performance of the
company so that divisional director can easily overcome with the current issues.
Outlining of the advice that would give to the Divisional Director in respect of the various issues
faced by Steel Co
Divisional director has implemented three different ways to manage the individual’s as
well as firm’s performance. But a year after implementing the changes, the divisional director
has undertaken the review of performance and determine that neither performance nor quality
has improved. Employee commitment was still found to be low and due to all such conditions,
divisional director has discussed this situation with a local business advisor who possesses
specialization in the performance management system.
Structuring individual performance targets so as to maximise the firm’s performance
As per the business advisor’s advice, it can be determine that it is highly essential to
motivate the employees so that they can perform in a more effective manner. He suggested to
organize individual’s performance targets so-as-to maximise firm’s performance (Luecke and
Hall, 2006). It has been founded that within Steel Co, employees usually lacks commitment to
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firm and were focused on working on their shifts. In order to enhance their commitment, it is
better to set individual performance targets as per their working hours and shifts.
It is suggested by business advisor that divisional director sorted employees into four
teams where different targets for each team are required to be set (Belbin's Team Roles, 2015).
Here, team leader is responsible for monitoring that all the set targets have been achieved on
time or not. Further, the term target here is used to express the major aim and objective
(Whitacre and et.al, 2003). At the time of setting performance targets, there are some of the
major key factors which need to be followed such as:
 All the targets required to be set and expressed in a manner that establishes a clear focus
for all the actions and decisions.
 It should be set for the process output or individual output according to the urgency of
work (Curtright, Stolp-Smith and Edell, 2000).
 Targets should always be focused on purpose rather than activities.
Moreover, business advisor stated that with the help of setting targets, Steel Co. can
easily monitor the processes and observe the whole variation.
Business advisor suggested that by using individual KPIs, they are able to know how well
someone is performing. It also provides them appropriate justifications that set targets have been
achieved or not. Individual KPIs suggests each team members that they must focus on to achieve
success. It also indicates that which activities are critical for their roles and how well they are
performing to them (Armstrong and Baron, 2000). It provides option to give teams frequent,
timely and consistent feedbacks. It is the most and best effective way to recognize their efforts,
reward, achievement and success.
From the above discussion, it can be entailed that with the help of setting individual
targets and continuous monitoring, maximization of performance of Steel Co can also be
achieved. Each individual tries to achieve their set KPIs in order to just enhance their
performance base.
How a performance management system can be used to improve employee development and
communications
Development and communication of employees working in an organization is highly
taken into consideration while assessing their performance management. Business advisor
suggested that with the help of setting appropriate structure for individual potential, target
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Company can improve its performance. It helps them in improving employee’s development as
well as leads to better communication. Company can improve their performance management
system by including various aspects such as motivation, compensation decisions, transfers,
promotions, bonus, incentives etc. As per the employee suggestion forum, Divisional director
founded that there are different working arrangements which could be improved (Thorpe and
Beasley, 2004). For the same, business advisor suggested that owner manager needs to change
his autocratic style of working and leads towards the motivation of all their workers. Within their
performance management system, owner manager needs to communicate with all its staff
members. Generally, there is mainly three phase’s i.e.
Figure 1 Stages of performance management system
(Source: Armstrong and Baron, 2000)
As per the above given diagrammatic representation, divisional officer of Steel Co. can
easily identify various stages of performance management system. It is being suggested to him
that he needs to set all his objectives and provide appropriate feedback to all their employees in
order to enhance their performance. By rewarding employee’s achievement, their personal
development can be made.
After having appropriate system, if a company is not able to improve the performance
then, the company requires involving in different key phases in which they can convert the
installation of a new performance management system (Curtright, Stolp-Smith, and Edell, 2000).
Business advisor suggested divisional director to implement this system by considering various
factors such as:
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 Communication: Making appropriate business case.
 Accountability: Presenting clear roles and responsibilities for all stakeholders starting
with its CEO. Skill development for all
 Alignment: In order to reinforce the desired behaviour, aligned system need to be
prepared.
 Clear measurement: Appropriate use of using and implementing measures.
The need to integrate performance management systems with other human resource processes
It is being suggested by the business advisor that there is a huge need for the appropriate
integration of performance management system with various HR process. In this process, owner
manager of Steel Co. needs to make better performance appraisals for all their staff members. In
order to do it in a right way, it is highly essential to monitor their performance on a daily basis.
By giving appropriate feedbacks within the team, they can boost up the team work and go
through the internal team reward systems on the basis of best team performance. In addition to
this, one-on-one interaction can be made among individual and management person so that
problems among employees can be reduced. On the other hand, integration of performance
management system with training and development helps employees in boosting up their
confidence level as well as enhancing their skill. It develops the team-based working and
improved communication mechanisms. Further, it can be determined that by having appropriate
performance appraisals, transferring as well as trainings performance can be enhanced.
The effectiveness of linking performance to financial reward
In today’s highly competitive environment, one of the major concerns for individuals is
money. Due to this, most of the workers of Steel Co. lacked commitment and were focused
purely on working their shift and earning their pay. They do not contribute towards the
company’s working effectively. However, Divisional Director introduced a scheme by which
team performance against production targets is linked to the payment of bonus to team members.
In this situation also, workers do not supported the company. In order to resolve this
problem, it is being suggested by business advisor that firm can link up their performance with
financial reward (Kagioglou, Cooper and Aouad, 2001). Through this, they can boost up the
confidence level of all the workers. However, they are highly inclined towards their pay scale
and this is the most effective factor which boosts up their confidence level to perform more
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appropriately. Performance based financial rewards allows company to directly align various
objectives to employees. It is highly critical to the success of organization (Curtright, Stolp-
Smith, and Edell, 2000). It is the most effective way which delivers healthier financial results.
CONCLUSION
From the whole study, it has been concluded that with the help of advice of Business
advisor Steel Co. can improve the performance of individuals as well as firm. By setting proper
structure of individual targets and link up, the individual performance with financial rewards
company can easily boost up the overall firm’s performance.
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REFERENCES
Armstrong, M. and Baron, A., 2000. Performance management. Human resource
management.pp.69-84.
Curtright, J. W., Stolp-Smith, S. C. and Edell, E. S., 2000. Strategic performance management:
development of a performance measurement system at the Mayo Clinic. Journal of
Healthcare Management. 45(1).pp.58.
Kagioglou, M., Cooper, R. and Aouad, G., 2001. Performance management in construction: a
conceptual framework. Construction management and economics.19(1).pp.85-95.
Luecke, R. and Hall, B., 2006. Performance Management: Measure and Improve the
Effectiveness of Your Employees. Harvard Business School Publishing, USA.
Thorpe, R. and Beasley, T., 2004. The characteristics of performance management research:
Implications and challenges. International Journal of Productivity and Performance
Management. 53(4).pp.334-344.
Whitacre, C. and et.al., 2003. Program performance management system. U.S. Patent
Application.
Online
Belbin's Team Roles. 2015. [Online]. Available through:
<http://www.mindtools.com/pages/article/newLDR_83.htm>. [Accessed on 18th February,
2016].
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